As filed on January 19, 1998
File No. 70-9341
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------
PRE-EFFECTIVE AMENDMENT
NO. 1
TO THE
FORM U-1 APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
----------------------------------------------------
New Century Energies, Inc.
1225 Seventeenth Street
Denver, CO 80202-5534
(Names of companies filing this statement
and addresses of principal executive offices)
----------------------------------------------------
New Century Energies, Inc.
(Name of top registered holding company parent)
----------------------------------------------------
Teresa S. Madden, Controller
New Century Energies, Inc.
1225 Seventeenth Street
Denver, Colorado 80202-5534
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
William M. Dudley, Esq. William T. Baker, Jr., Esq.
New Century Services, Inc. Thelen Reid & Priest LLP
1225 Seventeenth Street 40 West 57th Street
Denver, Colorado 80202-5534 New York, New York 10019-4097
<PAGE>
New Century Energies, Inc. ("NCE") hereby amends its
Application/Declaration on Form U-1, docketed in File No. 70-9341, as follows:
1. By replacing the second paragraph of Item 1 (Description of Proposed
Transaction) with the following:
In this Application/Declaration, NCE requests that the
Commission exempt it from the requirements of Rule 53(a)(1), with
respect to the investing by NCE of proceeds from its financings and the
issuance of its guarantees authorized by the Commission in File No.
70-9007 (or as may be authorized by the Commission in other dockets),
by allowing NCE to have an aggregate investment in exempt wholesale
generators ("EWGs") and foreign utility companies ("FUCOs"), as
calculated in accordance with Rule 53(a)(1)(i), in an amount up to
NCE's consolidated retained earnings, as determined in accordance with
Rule 53 (a)(1)(ii).1
--------------------------
1 [Footnote 1 not modified.]
2. By replacing the last paragraph of Item 1.A.2. (File No. 70-9007)
with the following:
Concurrent with the filing of this Application/Declaration, NCE
has filed an Application/Declaration on Form U-1 (File No. 70-9397)
requesting, among other things, that various of the financing limits
approved by the Commission in File No. 70-9007 be increased. NCE has
proposed to relinquish its current authorization in File No. 70-9007
upon the effective date of the Commission's order in the File No.
70-9397 proceeding approving NCE's application.
3. By replacing the first paragraph (including footnote 3) of Item 1.B.
(Proposed Modifications to Prior Orders; Applicability of Proposed Transactions
to Pending and Future NCE Financing Applications) with the following:
As of December 31, 1997, NCE's aggregate investment in EWGs
and FUCOs, pro forma to include NCE's initial investments in Yorkshire
Electricity and IPC, was approximately $364.4 million, and its average
consolidated retained earnings were approximately $715.6 million. As of
September 30, 1998, the aggregate investment figure was the same, and
average consolidated retained earnings were approximately $677.8
million. NCE's aggregate investment, including Yorkshire Electricity
and IPC, pro forma, is in excess of the 50% limit in Rule 53(a)(1).3 On
the other hand, if NCE had authority to make aggregate investments in
EWGs
1
<PAGE>
and FUCOs in an amount equal to 100% of its consolidated retained
earnings using proceeds from its external financings or other
credit-supported arrangements, NCE could have invested an additional
$351.2 million as of December 31, 1997, or $313.4 million as of
September 30, 1998.
--------------------------
3 The ratio of NCE's aggregate investment to its consolidated
retained earnings as of December 31, 1997 equaled 50.9% and as
of September 30, 1998 equaled 53.8%. The event that caused the
NCE system to exceed 50% of consolidated retained earnings was
the imposition of a U.K. government-mandated windfall tax on
Yorkshire Electricity, which is discussed below, not a new
investment.
4. By replacing the fifth paragraph of Item 1.C.1.a. (Yorkshire
Electricity) with the following:
With the exception of the loss associated with a windfall tax
in 1997,6 Yorkshire Electricity has made, and NCE anticipates that
Yorkshire Electricity will continue to make, a positive contribution to
NCE's earnings per share. NCE's after-tax earnings (excluding the
extraordinary windfall tax) related to its investment in Yorkshire
Electricity were approximately $36.1 million or $0.34 per average share
of common stock outstanding for the nine-month period ending December
31, 1997 and approximately $47.0 million or $0.42 per average share of
common stock outstanding for the eleven months ended November 30,
1998.6A In fact, NCE believes that it and its partner, AEP Resources,
can through the sharing of best practices improve Yorkshire
Electricity's already strong performance. Moreover, in addition to
providing NCE with a relatively stable source of income in the future,
NCE believes that there are lessons for it to learn, which can be
applied to the operations of the NCE Operating Companies, from the
approaches that Yorkshire Electricity takes in response to the
deregulation of the electric utility industry occurring in the U.K.
----------------------------
6 [Footnote 6 not modified.]
6A In the aggregate, NCE's investments in EWGs and FUCOs, again
treating Yorkshire Electricity and IPC as FUCOs, have made a
positive contribution to overall earnings (excluding the
extraordinary windfall tax).
5. By replacing the first sentence of Item 1.C.1.b. (IPC) with the
following:
2
<PAGE>
NCE, through NCI, owns a 21.6% interest in IPC, a company
organized under the laws of the United Kingdom.
6. By replacing the first paragraph of Item 1.C.2.b. (Central Piedra
Buena) with the following:
b. Piedra Buena
------------
By virtue of its ownership in IPC, NCI acquired a
21.6% ownership interest in Independent Power International Ltd.
("IPI") for no additional investment.9 IPI was established under the
laws of the Jersey Islands by the owners of IPC. IPI, through a
wholly-owned subsidiary, Corporacion Independiente Energie S.A., an
Argentine corporation, owns a 39% interest in Central Piedra Buena, an
Argentine corporation that owns the Piedra Buena power station, a 620
MW gas-fired plant in Bakia Blanca, Argentina, that is in operation.
IPI's acquisition was financed through a loan by IPC.
---------------------------
9. [Footnote 9 not modified.]
7. By replacing subsection 1 of Item 3.B.1. (The Proposed Transactions
Will Not Have a Substantial Adverse Impact Upon the Financial Integrity of the
NCE System) with the following:
The use of proceeds from the issuance of debt and
equity securities of NCE to make aggregate investments in EWGs and
FUCOs, and the issuance of, or provision for, Guarantees in connection
therewith by NCE, in amounts of up to NCE's consolidated retained
earnings will not have a "substantial adverse impact" on the financial
integrity of the NCE System.
The lack of any "substantial adverse impact" on NCE's
financial integrity as a result of increased levels of investments in
EWGs and FUCOs can be demonstrated in several ways, including the
analysis of historic trends in NCE's consolidated capitalization ratios
and retained earnings and the market view of NCE's securities.
Consideration of these and other relevant factors supports the
conclusion that the issuance of securities and Guarantees by NCE to
finance investments in EWGs and FUCOs exceeding the 50% consolidated
retained earnings limitation in Rule 53(a)(1) will not have any
"substantial adverse impact" on the financial integrity of NCE.
3
<PAGE>
a. Key financial ratios/benchmarks
-------------------------------
i. Capitalization ratios
---------------------
Aggregate investments in EWGs and FUCOs (as defined in Rule
53(a)) in amounts up to 100% of NCE's consolidated retained earnings
($677.8 million as of September 30, 1998) would still represent a
relatively small commitment of NCE capital for a company the size of
NCE, based on various key financial ratios at September 30, 1998. For
example, investments of this amount would be equal to only 13.7% of
NCE's total consolidated capitalization ($5.0 billion), 11.8% of
consolidated net utility plant ($5.8 billion), 9.1% of total
consolidated assets ($7.5 billion), and 12.5% of the market value of
NCE's outstanding common stock ($5.4 billion) as of September 30,
1998. The following chart shows how these compare to the same
percentages for Southern, CSW, GPU, Cinergy, and AEP, as reflected in
each system's respective 100% Orders.
Investments in EWGs and FUCOs (assuming equal to 100% of
consolidated retained earnings) as a percentage of:
Consolidated Market Value
Consolidated Net Utility Total Consoli- of Outstanding
Company Capitalization Plant dated Assets Common Stock
- ------- -------------- ----------- -------------- --------------
Southern 16.3% 15.4% 11% 20.4%
CSW 23% 23% 14% 31%
GPU 24.9% 34.2% 19.4% 49.8%
Cinergy 16% 16% 11% 19%
AEP 16% 13.8% 9.8% 18.5%
Average of above 19.2% 20.5% 13% 27.7%
NCE 13.7% 11.8% 9.1% 12.5%
This comparison verifies that an aggregate investment of 100% of NCE's
consolidated retained earnings would involve a relatively small
commitment of capital for a company of NCE's size. Moreover, in every
category, the NCE percentage is lower than the applicable percentage
for the other registered systems that have 100% Orders.
NCE's credit rating is currently BBB+ by Standard & Poor's, Baa1
by Moody's, and A- by Duff & Phelps. NCE's consolidated capitalization
and interest coverage ratios for 1997 (pro forma since the Merger was
only completed in August of 1997 and also to make adjustment to
eliminate the effects of the U.K. Windfall Tax, which was accounted
for as an extraordinary
4
<PAGE>
item) are within industry ranges set by independent debt rating
agencies for BBB rated companies, as shown below:
NCE Consolidated 1997 Debt to Capitalization and Interest Coverage
----------------------------------------------------------------------
Ratios (Excluding Non-Recourse Project Debt) for the Year Ended
----------------------------------------------------------------------
December 31, 1997 and for the Twelve Months Ended September 30, 1998*
--------------------------------------------------------------------
Year Ended 12 Mos. Ended
12/31/97 9/30/98
---------- --------------
Total Debt/Capital 50.8% 50.6%
Pre-Tax Interest Coverage 3.1x 3.8x
Funds from Operations
Interest Coverage 2.7x14 4.7x
Average Industry Ratios for BBB Rated Investor-Owned Utilities for the
----------------------------------------------------------------------
Twelve Months Ended June 30, 1998**
---------------------------------
12 Mos. Ended 12 Mos. Ended
12/31/97 6/30/98
------------- --------------
Total Debt/Capital 49.7% 52.4%
Pre-Tax Interest Coverage 2.6x 2.8x
Funds from Operations
Interest Coverage 3.3x 3.6x
* Consistent with rating agency treatment, mandatorily
redeemable preferred securities are not included in debt and
related interest coverage ratios.
** Standard & Poor's Utility Financial Statistics (Nov. 1997
and Nov. 1998).
NCE's pro forma consolidated capitalization ratios as of December
31, 1997 were 49.2% equity (including mandatorily redeemable preferred
securities and common and preferred equity) and 50.8% debt (including
approximately $590 million of short-term debt). NCE's pro forma
consolidated capitalization ratios as of September 30, 1998 were 49.4%
equity (including mandatorily redeemable preferred securities and
common and preferred equity) and 50.6% debt (including approximately
$560 million of short-term debt). No non-recourse debt of the NCE
Companies' EWGs and FUCOs is consolidated for financial reporting
purposes. This ratio continues to be within industry ranges set by
independent debt rating agencies for BBB rated companies.
5
<PAGE>
ii. Consolidated retained earnings
------------------------------
Again, using pro forma numbers (since the Merger was only
completed in August of 1997 and to make adjustments for the
effects of the U.K. Windfall Tax), NCE's consolidated retained
earnings have grown on average almost 6.0% per year for the
period from December 31, 1994 through September 30, 1998.
Consolidated retained earnings increased $63 million during 1995,
a 9.6% increase; by $53 million during 1996, a 7.4% increase; and
decreased by $3 million during 1997 (the year in which the Merger
was completed), a 0.5% decrease.15 For the nine months ended
September 30, 1998, consolidated retained earnings increased
$39.6 million or 5.2% from year end 1997.
Although it is not possible to compare on a pure
apples-to-apples basis, NCE's average annual retained earnings
growth rate is within the range of growth rates for those other
systems that have obtained 100% Orders.
iii. Rule 53(b) factors
------------------
With respect to the relevant financial benchmarks
specifically contemplated by Rule 53(b), none is applicable: (1)
there has been no bankruptcy of an NCE associate company (Rule
53(b)(1)); (2) NCE's average consolidated retained earnings for
the four most recent quarterly periods have not decreased by 10%
from the average for the preceding four quarterly periods (Rule
53(b)(2)); and (3) in the previous fiscal year, NCE did not
report operating losses attributable to its direct or indirect
investments in EWGs and FUCOs that exceeded an amount equal to 5%
of consolidated retained earnings (Rule 53(b)(3)).
NCE undertakes to notify the Commission by filing a
post-effective amendment in this proceeding in the event that any
of the circumstances described in Rule 53(b) arise during the
authorization period.
iv. Other indicators
----------------
Other financial indicators show the financial strength of
NCE. For example, on a pro forma basis to reflect both the Merger
and to eliminate the effect of the U.K. Windfall Tax on Yorkshire
Electricity in 1997, NCE's basic and diluted earnings per share
(before extraordinary items) and return on equity were $2.64 and
12.8%, respectively, for the year ended 1996 and $2.50 and 11.6%,
respectively, for the year ended 1997. For the twelve months
ended September 30, 1998, NCE's basic and
6
<PAGE>
diluted earnings per share and return on equity were $2.90 and
13.5%, respectively.
b. Market assessment of NCE
------------------------
i. Assessment of growth and earnings
---------------------------------
The market's assessment of NCE's future growth and earnings
also compares favorably to other electric utility issuers (again
using pro forma figures). This can be shown by comparison of
NCE's price-earnings and market-to-book ratios, as compared to
industry averages. These measures indicate investor confidence in
NCE.
1997 9/30/98
---- -------
P/E Ratio:
---------
NCE 19.2 16.8
Electric Industry 15.9* 16.6**
Market-to-Book Percent:
----------------------
NCE 215% 211%
Electric Industry 175%* 191%**
* 1997 industry average taken from Regulatory Research
Associates, Inc. - Utility Focus 1/6/98 Table II.
** Industry average taken from Regulatory Research Associates,
Inc. - Utility Focus 10/2/98 Table I.
An average to above average price/earnings ratio and
market-to-book percents were noted as indicators of favorable
market assessments in all of the 100% Orders.
ii. Dividend Payout Ratio
---------------------
NCE's indicated dividend rate at September 30, 1998 was
$2.32 per share. When calculated against NCE's earnings per share
of $2.90 for the twelve months ended September 30, 1998, the
payout ratio is close to the electric utility average.
9/30/98
-------
NCE Payout Ratio % 80
Electric Industry % 76*
* Regulatory Research Associates, Inc. - Utility Focus 10/2/98
Table I.
7
<PAGE>
----------------------------
[Footnotes 14 and 15 not modified.]
8. By replacing the first paragraph of Item 3.b.2.a. (Insulation from
risk) with the following:
All of NCE's investments in EWGs and FUCOs are, and
in the future will remain, segregated from the NCE Operating Companies.
While all of the NCE Companies' present investments in EWGs and FUCOs
originally were direct or indirect investments of PSCo and SPS, in File
No. 70-8787 (approving the Merger) and File No. 70-9193 (approving the
transfer of NCI from PSCo to NC Enterprises), NCE has obtained the
authority to segregate existing investments in EWGs and FUCOs from the
NCE Operating Companies. Thus, the NCE Operating Companies are, and are
currently expected in the future to remain, insulated from the direct
effects of investments by NCE and the NCE Companies in EWGs and FUCOs.
In connection with any entity that is presently an EWG or FUCO,
no NCE Operating Company owes indebtedness or has extended credit or
sold or pledged its assets, directly or indirectly, in connection with
any EWG or FUCO. Any losses that may be incurred by such EWGs and FUCOs
would have no effect on domestic rates of any NCE Operating Company
(because of the Applicants' undertaking not to seek recovery in rates).
NCE represents that it will not seek recovery through higher rates to
the NCE Operating Companies' utility customers in order to compensate
NCE for any possible losses that it or the NCE Companies may sustain on
investments in EWGs and FUCOs or for any inadequate returns on such
investments.
9. By replacing Item 3.B.2.b.i. (Debt/equity ratios) with the
following:
Debt (including short-term debt) ratios of the two major NCE
Operating Companies are consistent with the industry range for A-rated
electric utilities. The current industry average for A-rated electric
utilities is approximately 55%.16
Debt as % of Capitalization 1995 1996 1997 9/30/98
- --------------------------- ---- ---- ---- -------
PSCo 51% 51% 50%* 52%
SPS 42% 49% 49% 47%
* Restated to eliminate effect of U.K. Windfall Tax.
----------------------------
16 Standard & Poor's Utility Financial Statistics (Nov. 1998).
8
<PAGE>
10. By replacing Item 3.B.2.b.iii. (Security ratings) with the
following:
The NCE Operating Companies' coverages have generally been within
the A and BBB ranges set by the major rating agencies in recent years.
The NCE Operating Companies continue to show adequate financial
statistics as measured by the rating agencies.
DEBT RATINGS (as of 12/31)
------------
S&P Rating: 1995 1996 1997 1998
---------- ---- ---- ---- ----
PSCo BBB+ A- A A
SPS AA AA A A
CLFP BBB BBB BBB BBB
Moody's Rating: 1995 1996 1997 1998
-------------- ---- ---- ---- ----
PSCo Baa1 A3 A3 A3
SPS Aa2 Aa2 Aa2 Aa2
CLFP N/A N/A N/A N/A
Duff & Phelps Rating: 1995 1996 1997 1998
-------------------- ---- ---- ---- ----
PSCo N/A N/A N/A A
SPS AA AA AA AA
CLFP N/A N/A N/A N/A
PREFERRED STOCK RATINGS
-----------------------
PSCo and SPS have no outstanding traditional preferred stock.
In addition, the rating agencies consider the NCE Operating
Companies as having relatively favorable competitive positions, with
Standard & Poor's ranking PSCo "average" and SPS "reasonably strong"
business position. See Standard & Poor's Utility Credit Report, May,
1998. In May, 1998, Standard & Poor's affirmed the ratings of both of
the major NCE Operating Companies, and revised its 1997 outlook on
PSCo to positive from stable. SPS's outlook from Standard & Poor's
remains stable.17
NCE does not believe that investments made in EWGs and FUCOs have
negatively affected the first mortgage bond ratings of its NCE
Operating Companies, PSCo and SPS. Upon announcement
9
<PAGE>
of the acquisition of Yorkshire Electricity, the credit ratings of
PSCo were affirmed by Moody's and Standard & Poor's. None of the
ratings of the NCE Operating Companies has been downgraded as a result
of investments in an EWG or FUCO.
-----------------------------
17 [Footnote 17 not modified.]
11. By adding the following paragraph at the end of Item 3.C.
(Compliance with Rule 54):
Moreover, NCE will report to the Commission any non-recourse
debt incurred by any NCE Company in financing any acquisition of an
interest in an EWG or FUCO in its periodic financial reports and other
required reports (including those on Form U-6B-2 and Rule 24
certificates).
12. By replacing Item 6 (Exhibits and Financial Statements) in its
entirety with the following:
Exhibits
--------
Exhibit D-1 Letter of the Colorado Public Utilities Commission
dated June 16, 1998
Exhibit D-2 Letter of the Kansas Corporation Commission dated
August 6, 1998
Exhibit D-3 Letter of the New Mexico Public Utility Commission
dated June 15, 1998
Exhibit D-4 Letter of the Oklahoma Corporation Commission dated
July 13, 1998
Exhibit D-5 Letter of the Public Utility Commission of Texas dated
July 8, 1998
Exhibit D-6 Letter of the Wyoming Public Service Commission dated
July 23, 1998
Exhibit F Opinion of Counsel
Exhibit G Financial Data Schedule of New Century Energies,
Inc. (previously filed)
Exhibit H-1 Ratings of Yorkshire Electricity and YPG (corrected
version)
Exhibit H-2 Proposed Form of Federal Register Notice (previously
filed)
Financial Statements
--------------------
FS-1 NCE Consolidated Financial Statements as of December 31,
1997 (incorporated by reference to the Annual Report
on Form 10-K of NCE for
10
<PAGE>
the fiscal year ended December 31, 1997
(File No. 1-12927))(previously filed)
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this Pre-Effective
Amendment No. 1 to the Application/Declaration to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW CENTURY ENERGIES, INC.
By: /s/ Richard C. Kelly
----------------------------------------
Name: Richard C. Kelly
Title: Executive Vice President and
Chief Financial Officer of
New Century Energies, Inc.
Date: January 19, 1999
11
<PAGE>
EXHIBIT D-1
2 Pages
STATE OF COLORADO
PUBLIC UTILITIES COMMISSION Department of Regulatory Agencies
Joseph A. Garcia
Robert J. Hix, Chairman Executive Director
Vincent Majkowski, Commissioner
R. Brent Alderfer, Commissioner
Bruce N. Smith, Director
Roy Romer
Governor
June 16, 1998
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Mr. Katz:
New Century Energies, Inc. ("NCE") and Public Service Company of
Colorado ("PSCo") advised the Colorado Public Utilities Commission
("Commission") that NCE anticipates that it will make a request to the
Securities and Exchange Commission. NCE plans to request approval for an
increase in its authority for investments in foreign utility companies ("FUCOs")
and exempt wholesale generators ("EWGs") beyond that permitted under existing
NCE orders and Rule 53 promulgated under the Public Utility Holding Company Act
of 1935 (the "Act"). In connection with such activities, NCE requested that the
Commission provide to you the certification contemplated in Section 33(a)(2) of
the Act.
As the State Commission having jurisdiction over the retail electric
rates of NCE's public utility subsidiary, PSCo, please be advised that this
Commission:
(i) has the authority and resources to protect the ratepayers of PSCo
and
(ii) intends to exercise such authority.
This certification is applicable to FUCOs and EWGs in which NCE or its
subsidiaries seek to obtain an ownership interest. The
<PAGE>
certification is subject to being revised or withdrawn by the Commission in the
future.
Very truly yours,
/s/ Bruce N. Smith
-----------------------------------
Bruce N. Smith
Director
cc: Office of Consumer Counsel
Securities and Exchange Commission
1580 Logan Street, Office Level 2, Denver,
Colorado 80203, (303) 894-2000
www.puc.state.co.us Consumer Affairs (303) 894-2070
Permit and Insurance (Outside Denver)1-800-888-0170
Consumer Affairs (Outside Denver) 1-800-456-0858
V/TDD (303) 894-7880 Fax (303) 894-2065
Hearing Info 1303) 894-2025
2
<PAGE>
EXHIBIT D-2
2 Pages
-------------------------------------
Kansas Corporation Commission
-------------------------------------
Bill Graves John Wine Susan M. Seltsam Cynthia L. Claus
Governor Chair Commissioner Commissioner
August 6, 1998
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kansas Corporation Commission Certification to the Securities and Exchange
Commission Regarding Foreign Utility Company and Exempt Wholesale Generator
Ownership by New Century Energies, Inc.
Dear Mr. Katz:
New Century Energies, Inc. ("NCE") and Southwestern Public Service
Company ("SPS") have advised the Kansas Corporation Commission ("Commission" or
"KCC") that NCE anticipates requesting approval from the Securities and Exchange
Commission ("SEC") for an increase in its authority for investments foreign
utility companies ("FUCOs") and exempt wholesale generators ("EWGs") beyond that
permitted under existing NCE orders and Rule 53 promulgated under the Public
Utility Holding company Act of 1935 ("the Act"). In connection with such
activities, NCE has requested that the Commission provide to you the
certification contemplated in Section 33(a)(2) of the Act.
As one of the state commissions having jurisdiction over the retail
electric rates of NCE's public utility subsidiary, SPS, please be advised that
given the conditions contained in a letter dated August 6, 1998, filed in KCC
Docket No. 99-SWPE-076-MIS, this Commission:
(i) has the authority and resources to protect the ratepayers of SPS
and
(ii) intends to exercise authority.
<PAGE>
This certification is applicable to all FUCOs and EWGs in which NCE or
its subsidiaries seek to obtain an ownership interest. This certification is
subject to being revised or withdrawn by the Commission at any time.
Sincerely,
/s/ John Wine /s/ Susan M. Seltsa /s/ Cynthia L. Claus
- ------------- ------------------- --------------------
John Wine Susan M. Seltsa, Cynthia L. Claus
Chair Commissioner Commissioner
1500 SW Arrowhead Road, Topeka, Kansas 66604-4027 (785) 271-3100
2
<PAGE>
EXHIBIT D-3
2 Pages
GARY JOHNSON, Governor
NEW MEXICO WAYNE SHIRLEY, Chairman
PUBLIC UTILITY BEATRIZ RIVERA, Commissioner
COMMISSION ROBERT M. SCHWARTZ, Commissioner
- -------------------------------------------------------------------------------
Marian Hall * 224 East Palace Avenue * Santa Fe, New Mexico 87501-2013
(505) 827-6940 * FAX (505) 827-6973
June 15, 1998
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington. D. C. 20549
Re: New Mexico Public Utility Commission Certification to the Securities and
Exchange Commission Regarding Foreign Utility Company and Exempt Wholesale
Generator Ownership by New Century Energies, Inc.
Dear Mr. Katz:
New Century Energies Inc. ("NCE") and Southwestern Public Service
Company ("SPS") have advised the New Mexico Public Utility Commission
("Commission") that NCE anticipates requesting approval from the Securities and
Exchange Commission ("SEC") for an increase in its authority for investments
foreign utility companies ("FUCOs") and exempt wholesale generators ("EWGs")
beyond that permitted under existing NCE orders and Rule 53 promulgated under
the Public Utility Holding Company Act of 1935 ("the Act"). In connection with
such activities, NCE has requested that the Commission provide to you the
certification contemplated in Section 33(a)(2) of the Act.
As one of the state commissions having jurisdiction over the retail
electric rates of NCE's public utility subsidiary, SPS, please be advised that
this Commission:
(i) has the authority and resources to protect the ratepayers of SPS
and
(ii) intends to exercise such exercise such authority.
<PAGE>
This certification is applicable to all FUCOs and EWGs in which NCE or
its subsidiaries seek to obtain an ownership interest. This certification is
subject to being revised or withdrawn by the Commission in the future.
Sincerely,
Excused /s/ Beatriz Rivera /s/ Robert M. Schwartz
- -------------- --------------------- -----------------------
Wayne Shirley Beatriz Rivera Robert M. Schwartz
Chairman Commissioner Commissioner
2
<PAGE>
EXHIBIT D-4
2 Pages
BOB ANTHONY DENISE A. B0DE ED APPLE
Commissioner Commissioner Commissioner
OKLAHOMA
CORPORATION COMMISSION
P.O. BOX 5200O-2000 400 Jim Thorpe Building
OKLAHOMA CITY, OKLAHOMA 73152-2000 Telephone. (405) 521-2255
FAX: (405) 521-4150
Office of General Counsel Lawrence R. Edmison, General Counsel
July 13, 1998
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: State Commission Certification to the Securities and Exchange
Commission Regarding Foreign Utility Company Ownership and
Exempt Wholesale Generator Ownership; New Century Energies, Inc.
Dear Mr. Katz:
New Century Energies, Inc. ("NCE") and Southwestern Public Service
Company ("SPS") have advised the Oklahoma Corporation Commission (the
"Commission") that NCE anticipates requesting approval from the Securities and
Exchange Commission ("SEC") for an increase in its authority for investments in
foreign utility companies ("FUCO") and exempt wholesale generators ("EWG")
beyond that permitted under existing NCE orders and Rule 53 promulgated under
the Public Utility Holding Company Act of 1935 (the "Act"). In connection with
such activities, NCE has requested that the Commission provide to you the
certification contemplated in Section 33(a)(2) of the Act.
As one of the State Commissions having jurisdiction over the retail
electric rates of NCE's public utility subsidiary, SPS, please be advised that
this Commission:
(i) has the authority and resources to protect the Oklahoma
jurisdictional ratepayers of SPS and,
(ii) intends to exercise such authority.
<PAGE>
This certification is applicable to all FUCO's and EWGs in which NCE or
its subsidiaries seek to obtain an ownership interest. The certification is
subject to being revised or withdrawn by the Commission in the future.
Sincerely
/s/ Ed Apple
--------------------------------
Ed Apple
Chairman
cc: David Hudson, Southwestern Public Service Company
SERVICE - ASSISTANCE - COMPLIANCE
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EXHIBIT D-5
10 Pages
Public Utility Commission of Texas Pat Wood, III
1701 N. Congress Avenue Chairman
P. 0. Box 13326
Austin, Texas 78711-3326 Judy Walsh
512/936-7000 - (Fax) 936-7003 Commissioner
Web Site: www.puc.state.tx.us
Patricia A. Curran
Commissioner
July 8, 1998
Mr. Jonathan G. Katz
Secretary
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Mr. Katz:
New Century Energies, Inc. (NCE) and Southwestern Public Service
Company (SPS) have advised the Public Utility Commission of Texas (PUCT) that
NCE anticipates requesting approval from the Securities and Exchange Commission
(SEC) for an increase in its authority for investment in foreign utility
companies (FUCOs) and exempt wholesale generators (EWGs) beyond that permitted
under existing NCE orders and Rule 53 promulgated under the Public Utility
Holding Company Act of 1935 (PUHCA). In connection with such activities, NCE has
requested that the Commission provide to you the certification contemplated in
Section 33(a)(2) of PUHCA of the PUCT's authority to protect the ratepayers of
SPS.
As the Commission having jurisdiction over the retail electric rates of
SPS in the State of Texas, please be advised that the PUCT:
(i) has the authority and resources to protect the ratepayers of SPS;
and
(ii) intends to exercise such authority.
This certification is applicable to all FUCOs and EWGs in which NCE or
its subsidiaries seek to obtain an ownership interest. The certification is
subject to being revised or withdrawn by the PUCT in the future.
<PAGE>
Page 2
J. G. Katz
July 8, 1998
NCE has agreed to comply with the requirements of P.U.C. SUBST. R. 23.18
(attached for your convenience) regarding FUCO ownership by exempt holding
companies as a condition of PUCT certification. Please contact Ms. Martha Hinkle
of the PUCT staff if you have any questions on this matter.
Sincerely,
PUBLIC UTILITY COMMISSION OF TEXAS
/s/ Pat Wood, III
---------------------------------------
Pat Wood, III, Chairman
/s/ Judy Walsh
----------------------------------------
Judy Walsh, Commissioner
cc: Office of Public Utility Regulation
Securities and Exchange Commission
Attachment: SUBST. R. 23.18
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Section 23.18 Foreign Utility Company Ownership by Exempt Holding Companies.
(a) Upon request by a holding company which is exempt under Section 3 of
the Public Utility Holding Company Act of 1935, codified at 15 United
States Code 79, the commission may certify to the SEC that the
commission has the authority and resources to protect ratepayers and
that it intends to exercise its authority over holding companies owning
both a jurisdictional utility and a foreign utility company (FUCO)
under the safe harbor provisions of subsection (c) of this section or
the case-by-case review provisions of subsection (d) of this section.
The commission may also notify the SEC that a previously-issued
certification regarding a requesting holding company will be
ineffective prospectively.
(b) The commission will seek to protect the public interest in having
electricity service available to all citizens of the state at just,
fair, and reasonable rates that are unaffected by investments by exempt
holding companies in foreign utility companies (FUCOs), while avoiding
strictures that would place exempt holding companies at a competitive
disadvantage in international markets. The commission will consider
these policy goals in each decision whether to issue a certification or
to notify the SEC that a previously issued certification is
prospectively withdrawn.
(c) The following safe harbor provisions shall be applicable to investments
in FUCOs by exempt holding companies that are affiliated with electric
utilities subject to the regulatory jurisdiction of the commission:
(1) The commission shall certify to the SEC that the commission
has the authority and resources to protect ratepayers subject
to its jurisdiction and that it intends to exercise its
authority, provided that all holding companies of electric
utilities that are subject to the regulatory jurisdiction of
this commission shall have filed with the commission corporate
undertakings, signed under oath by an authorized executive
officer of the holding company agreeing to adhere to the
covenants and to make the filings specified in subsection
(c)(2) of this section.
(2) The holding company shall adhere to the following covenants:
(A) That any indebtedness incurred in relation to the
acquisition by the holding company, or by any
affiliate of the electric utility, of an ownership
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interest in a FUCO will be without recourse to the
electric utility;
(B) That the electric utility, the holding company, or
any affiliate of the electric utility will not enter
into any agreements under the terms of which the
electric utility is obligated to commit funds in
order to maintain the financial viability of a FUCO
or an affiliate of the electric utility investing in
a FUCO;
(C) That the electric utility will not provide, directly
or indirectly, any guarantees or other forms of
credit support for any funds borrowed by the holding
company or an affiliate of the electric utility in
connection with the acquisition of any ownership
interest in a FUCO;
(D) That the electric utility, the holding company, or
any affiliate of the electric utility will not make
any investment in a FUCO under circumstances in which
the electric utility would be liable for the debts
and/or liabilities of the FUCO incurred as a result
of acts or omissions of the FUCO;
(E) That the electric utility will maintain and provide a
copy to the commission of its accounting policies and
procedures that assure that the electric utility is
adequately and fairly compensated by the holding
company or an affiliate of the electric utility for
any use of the electric utility's assets or personnel
in furtherance of a FUCO;
(F) That the holding company provides the commission
reasonable access to books and records and financial
statements, or copies thereof, of the FUCO or other
affiliate doing business with the FUCO, in English
and stated in United States dollars, as the
commission may request to:
(i) review transactions between the utility
and such FUCO or affiliate pursuant to
Section 1.271 of the Act; and
(ii) review transactions between any affiliate
and the FUCO if such affiliate also has
transactions directly or indirectly with the
utility;
(G) That the holding company will file with the
commission quarterly a report listing the total
amount of the
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aggregate investments by the holding company
and its subsidiaries and the percentage of the
holding company's consolidated net worth, from the
company's most recent SEC form 10Q represented by
such investments;
(i) "Aggregate investment" means all amounts
invested, or committed to be invested, in
exempt wholesale generators located outside
the United States (foreign EWGs) and FUCOs,
for which there is recourse, directly or
indirectly, to the holding company. Among
other things, the term shall include
preliminary development expenses that
culminate in the acquisition of a foreign
EWG or a FUCO.
(ii) Such report shall be filed no later than ten
days following the filing of the 10-Q for
the quarter.
(H) That in the event the holding company anticipates
making any investment in a FUCO that would result in
the aggregate investment as defined in subparagraph
(G) of this paragraph of such holding company
exceeding 30% of the consolidated net worth of such
holding company, the holding company shall so advise
the commission before a final commitment to ownership
of such FUCO is made;
(I) That the electric utility will provide, by March 31
of each year, a copy of the electric utility's
three-year cash flow forecast;
(J) That the holding company will provide to the
commission all SEC forms for reporting information
related to foreign EWG and FUCO investments, no later
than ten days after such forms are provided to the
SEC;
(K) That the holding company will promptly notify the
commission whenever any of the following occurs:
(i) It is unable to provide the certifications,
undertakings, or documents provided for in
this paragraph;
(ii) The aggregate investment exceeds 30% of
consolidated net worth;
(iii) The holding company's operating losses
attributable to its direct or indirect
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investments in foreign EWGs and FUCOs
exceeded 5.0% of consolidated retained
earnings during the previous four quarters;
and
(L) That the holding company will comply with the
informational filing requirements of subsection (d)
of this section in connection with a contemplated
investment in a FUCO, unless the commission finds
good cause not to require the holding company to
provide such additional information.
(d) For any occasion for which a holding company has undertaken to notify
the commission of an event specified in subsection (c)(2)(H) or (K) of
this section, the following provisions apply:
(1) The holding company shall provide the following information,
to the extent such information is reasonably available at the
time of submission of the filing, at least 30 days before the
date when it anticipates making a final commitment to
ownership of a FUCO not already covered by a certification
letter:
(A) A description of the proposed investment, including a
description of the FUCO assets being acquired, their
geographical location, the form of the investment
(partnership, joint venture, direct purchase, etc.),
the holding company's percentage share of the
investment, a description of how the investment will
fit into the corporate subsidiary structure, and any
other information reasonably necessary in the opinion
of the holding company to provide a complete overview
of the nature of the proposed investment;
(B) Any financial requirements and/or commitments by the
holding company or the utility that will be made or
assumed as a result of this investment; this
information should include, but is not limited to, an
estimate of the amount of equity capital to be
invested;
(C) Any debt obligations resulting from this investment
which will provide recourse to the holding company or
the utility;
(D) The holding company's general corporate objectives
regarding diversification and foreign utility
investments, and the specific objectives of the
proposed FUCO investment;
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(E) A statement that the utility has effective written
policies and accounting procedures which insure that
any use by the FUCO of assets or personnel of an
affiliate of the utility, or other transactions
between the FUCO and an affiliate of the utility
shall not negatively affect Texas ratepayers; and a
statement that the utility will demonstrate in each
subsequent rate proceeding before the commission, and
each subsequent audit, that no FUCO investment
increased the cost of capital or revenue requirement
of the utility;
(F) A calculation, based on the holding company's most
recent SEC Form 10Q, of aggregate consolidated
holding company investments as defined in subsection
(c)(2)(G) of this section as a percentage of
consolidated holding company net worth, stated both
before and after all asset transfers from any
affiliate of the utility to FUCOs at fair market
value;
(G) A statement that the holding company will provide to
the commission all SEC forms for reporting
information related to foreign EWG and FUCO
investments, no later than ten days after such forms
are provided to the SEC; and
(H) Responses to questions, if any, contained on a commission
prescribed form.
(2) The notification prescribed in this subsection may be
submitted less than 30 days before the date when the holding
company anticipates making a final commitment to ownership of
a FUCO not already covered by a certification letter upon a
showing of good cause. Good cause for purposes of the
preceding sentence shall be deemed to include, without
limitation, a representation that the holding company lacked
the information required to make a submission hereunder at an
earlier date or a representation that making the submission at
an earlier date would have unreasonably jeopardized the
ability of the holding company to go forward with the
contemplated investment.
(3) In its review of the information provided pursuant to this
section, the commission will consider, among other things, the
number and magnitude of prior FUCO investments by the holding
company, including the diversity among the countries in which
such investments are located and other differences between
such investments, and the magnitude of the proposed investment
and its effect on the diversity of the portfolio.
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(e) Post-investment reporting. The utility shall comply with the following
post-investment reporting obligations:
(1) With respect to any investment in a FUCO for which an
informational filing was made pursuant to subsection (d)(1) of
this section, the utility or holding company shall notify the
commission no later than ten days after the holding company
makes a final commitment to ownership of a FUCO that such a
commitment has been made. Such notice shall include any
material corrections, additions, and supplementation of
previously-provided information; and
(2) For any FUCO investment covered by a certification, the
utility or holding company shall notify the commission no
later than 30 days after any material change in the
circumstances or nature of an investment in a FUCO. Such
notice shall include all appropriate corrections, additions,
and supplementation of previously-provided information. A
material change would include, but is not limited to, any
change that would have an adverse impact of greater than 1.0%
of consolidated net worth most recently reported; full or
partial divestiture of the investment; a catastrophic event
that destroys a significant amount of FUCO property or results
in loss of life that could result in a significant liability
claim; a change in the laws or government policy having a
material impact on the FUCO; or an event which would place a
significant restriction on the repatriation of earnings of the
FUCO.
(f) Commission standards for granting or maintaining certification.
(1) In general, the commission will issue and continue
certification when the aggregate investment in FUCOs and
foreign EWGs is less than 30% of the holding company's
consolidated net worth, and the company has satisfactorily
provided the information and assurances set out in the
preceding subsections.
(2) With respect to any investment in a FUCO for which an
informational filing was made pursuant to subsection (d)(1) of
this section, the commission shall determine on a case by case
basis whether to issue a certification to the SEC or maintain
a previously issued certification. The commission shall
endeavor to make such a determination prior to the date when
the holding company anticipates having to make a final
commitment to ownership of the FUCO. If the commission
determines that it does not intend to continue
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certification, it may inform the SEC that maintaining a
previously-issued certification would be inappropriate.
(3) The commission shall notify the holding company requesting the
certification or retention of certification of its decision
within 45 days of receiving the request. If no action is taken
by the commission within 45 days of receiving the request, the
certification shall be deemed granted or affirmed.
(4) Any information submitted by a holding company pursuant to
this section may be submitted by the holding company under
seal. Each page tendered under seal shall have the words
"Confidential Information" typed or stamped on its face. The
holding company shall clearly identify each portion of the
application alleged to be Confidential Information; identify
the exemption to the Open Records Act, Texas Government Code,
Chapter 552, applicable to the alleged Confidential
Information; and provide a detailed explanation of why the
alleged Confidential Information is exempt from public
disclosure under the Open Records Act. If the commission
receives an Open Records Act request for disclosure of
Confidential Information, then the Executive Director shall
promptly so notify the holding company. The Executive Director
shall timely request an Attorney General's opinion as to
whether the information falls within any of the exemptions
identified in Subchapter C of the Open Records Act. The
Executive Director shall promptly provide to the holding
company a copy of an Attorney General opinion regarding the
claim of confidentiality. If an Attorney General opinion
recommends disclosure of Confidential Information, either in
whole or in part, then the Executive Director shall not
release such information for ten calendar days, in order to
allow the holding company time to pursue any legal remedies
that it may have. The holding company may require the
execution of an appropriate confidentiality agreement prior to
providing access to such confidential information to the Legal
Division of the Office of Regulatory Affairs or other
interested party. The form of any such confidentiality
agreement shall be approved by the Legal Division prior to
filing and included with the informational filing.
(5) Within 45 days of the effective date of this section, each
holding company regarding whose FUCO investments the
commission has issued a certification letter shall submit to
the commission a letter listing all FUCOs in which the company
has invested, and
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(A) making the covenants set forth in subsection (c) of this
section, or
(B) satisfying the provisions of subsection (d) of
this section.
Section 23.18-4
effective date 2/7/96
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EXHIBIT D-6
2 Pages
THE STATE OF WYOMING
JIM GERINGER
GOVERNOR
Public Service Commission
HANSEN BUILDING, SUITE 300 2515 WARREN AVENUE CHEYENNE,
WYOMING 82002
(307) 777-7427 FAX (307) 777-5700 TTY (307) 777-7427
http://psc.state.wy.us
STEVE ELLENBECKFR STEPHEN Q. OXLEY
CHAIRMAN SECRETARY AND CHIEF
KRISTIN H. LEE COUNSEL
DEPUTY CH DAVID M. MOSIER
STEVIE FURTNEY ADMINISTRATOR
COMMISSIONER
July 23, 1998
Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Securities and Exchange Commission file no. _________
Request for PUHCA Section 33(a)(2) Certification
Dear Mr. Katz:
The Wyoming Public Service Commission (Commission) has been informed by
Cheyenne Light Fuel & Power Company (Cheyenne Light) and New Century Energies,
Inc. (NCE), that NCE anticipates requesting approval from the Securities and
Exchange Commission (SEC) for an increase in its authority for investments in
foreign utility holding companies (FUCOs) and exempt wholesale generators (EWGs)
beyond the limits permitted under existing orders concerning NCE and Rule 53 of
the Public Utility Holding Company Act of 1935 (15 U.S.C. Sections 79, et seq.)
(Act). In connection with such activities, NCE has requested that the Commission
provide you with the certification contemplated in Section 33(a)(2) of the Act,
which section was added to the Act by Section 715 of the Energy Policy Act of
1992.
<PAGE>
As the state utility regulatory Commission having jurisdiction over the
retail electric and natural gas rates of Cheyenne Light, a public utility and
subsidiary of NCE, the Commission hereby certifies that it [i] has the authority
and resources to protect the ratepayers of Cheyenne Light, and [ii] intends to
exercise such authority.
This certification is intended to be applicable with respect to all
FUCOs. and EWGs in which NCE or its current affiliates now or in the future seek
to obtain an ownership interest. This certification is conditioned upon NCE and
Cheyenne Light fulfilling the commitments they have made to the Commission as
set forth in Attachments to this letter.
This certification is subject to being revised or withdrawn in the
future with regard to any or all future transactions or acquisitions.
Yours very truly,
/s/ Stephen G. Oxley
------------------------------------
STEPHEN G. OXLEY
Secretary and Chief Counsel
xc: Office of Public Utility Regulations
Securities and Exchange Commission
450 Fifth Street
Washington, DC 20549
President Richard L. Kaysen, Cheyenne Light
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EXHIBIT F
2 Pages
New Century Energies, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
January 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: New Century Energies, Inc.
Form U-1 Application/Declaration
(File No. 70-9341)
Dear Sirs:
I refer to the Form U-1 Application/Declaration, as amended (the
"Application"), under the Public Utility Holding Company Act of 1935, as amended
(the "Act"), filed with the Securities and Exchange Commission (the
"Commission") by New Century Energies, Inc. ("NCE"), a Delaware corporation. I
have acted as counsel for NCE in connection with the Application.
In the Application, NCE requests that the Commission exempt it from the
requirements of Commission Rule 53(a)(1), with respect to the investing by NCE
of proceeds from its financings and the issuance of its guarantees authorized by
the Commission in other proceedings, by allowing NCE to have an aggregate
investment in "exempt wholesale generators" (as defined in section 32(a) of the
Act) and "foreign utility companies" (as defined in section 33(a) of the Act),
as calculated in accordance with Rule 53(a)(1)(i), in an amount up to NCE's
consolidated retained earnings, as determined in accordance with Rule
53(a)(1)(ii). This opinion is furnished in connection with this requested
action.
I am of the opinion that NCE is a validly organized and duly existing
corporation under the laws of the State of Delaware. I am further of the opinion
that upon the issuance of a Commission order approving the Application, and
assuming that NCE's issuance of securities and guarantees for the purpose of
acquiring exempt wholesale generators and foreign utility companies are made in
accordance with the terms of the Application and such Commission order (as well
as in accordance with the terms of all other applicable rules, regulations, and
orders):
1. All state laws applicable to the proposed transactions will
have been complied with;
<PAGE>
2. Securities and guarantees issued by NCE for the purposes
described in the Application will be legal, valid, and binding
obligations of NCE; and
3. The consummation of the proposed transactions will not violate
the legal rights of the holders of any securities issued by
NCE or any associate company of NCE.
I hereby consent to the use of this opinion as an exhibit to the
Application.
Sincerely,
/s/ William M. Dudley
--------------------------------
William M. Dudley
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EXHIBIT H-1
Corrected Version
RATINGS OF
YORKSHIRE POWER GROUP
and
YORKSHIRE ELECTRICITY GROUP plc
as of May 12, 1998
Moodys S&P Duff & Phelps Fitch IBCA
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Short Long Short Long Short Long Short Long
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